What's the Difference Between a Privacy Policy, Disclaimer, and Terms & Conditions?

October 3, 2017 | By Zachary Paruch

Any venture into the world of ecommerce, be it an online store, app, marketing endeavor, or indeed any scenario when you’re selling your goods or services to online customers, has unavoidable legal consequences.

As a savvy entrepreneur, you’ve probably anticipated the need to make your website not only user-friendly, but also compliant with legal requirements.

The different legal documents, however, may prove confusing even for the most business-minded among online business agents. Further, their applicability and effects vary from jurisdiction to jurisdiction, making the matter even more complicated, since online commerce is generally a global endeavor.

Here’s a breakdown of the three most common legal documents and statements you should have on your website or mobile app and how they differ from one another.

Increasingly, however, online privacy protection is a matter of law. Posting and complying with a privacy policy is no longer an option, but an obligation.

It’s important to note that, due to the nature of technology, you may unknowingly collect information about website visitors. Any site that uses cookies or tracking technologies to collect data, even if that data is not connected to a street address or name, has access to private information.

Digital analytics software collects information from users browsing your site before they have even ordered a product or service. For this reason alone, it’s essential to create a privacy policy tailored to your website that users can easily find on your homepage, and not just as a pop-up once visitors enter credit card information.

In order to stay compliant, the Federal Trade Commission advises website owners to review and adhere to their own privacy policies, or they could face legal action. State law may also require that online entities have privacy policies in place.

In the case of an online store, the terms and conditions determines what will happen in the event of a sale. Essentially, it enables you to structure your return policy, shipping deadlines, and any other details that are essential to the transaction.

While your online store may display a product with a price attached, the terms and conditions offer the “fine print” as to what actually occurs when a user surfing your website decides to purchase and wants to enter their credit card information.

The FTC does not require you to have a terms and conditions document on your website; in fact, it’s entirely possible, from a legal standpoint, to do business without one. However, doing so is akin to making a handshake deal in real life versus having a written contract. With a handshake deal, you’re taking the other party at their word that they will uphold their obligations.

3. Disclaimers

Although many people are said to ignore disclaimers because they appear so frequently, they are an important part of business correspondence. They are also a common sight on websites to remind users of the limitations of the service provided.

An excellent example of a disclaimer is found on most law firm websites, stating that the information is of a general nature only and not to be used as legal advice. The intent of that kind of a disclaimer is to prevent someone from suing a law firm after suffering harm from following general advice they received from the site.

Non-licensed entrepreneurs who sell a particular type of product, such as health supplements, must adhere to specific FDA guidelines that prohibit sellers from making unsupported health claims. Whenever you sell a product online, it’s essential to review the legal body that governs your industry so you can generate a disclaimer unique to your site that limits your liability.

Having a disclaimer for your website will limit or prevent legal liabilities and claims in the event that a user misinterprets your site content.

In order to decide what kind of information to use in a disclaimer, it’s a good idea to do a self-assessment of how your website will be, or could be, used. Upon consultation with a lawyer, you may want to include any potential risks to users in a disclaimer.

For example, if you are a third-party reseller of consumer goods, you may want to affirm that you do not take responsibility for the condition of the goods once shipped by the third party. In essence, a disclaimer is intended to limit liability, but you should speak with a lawyer if you have significant concerns about the ultimate well-being of those who use your website.

Conclusion

Before you launch your website, you should use these documents to both comply with the law and protect yourself from liability. Taking these proactive steps, even when it’s not explicitly required, can help ensure you’re on firm ground in the event of a legal dispute and that you are offering a positive image of professionalism to your users.

Written by
Zachary Paruch

Zachary Paruch is a product manager and legal analyst at Termly, where he helps to develop legal policy software for small businesses.
He has been featured in the HuffPost, CMS Wire, AllBusiness.com, Ecwid, Simple Programmer, Credit Karma, and many, many more.

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